BORDER BARGAINS

EVERY THREE MONTHS, Rose Muchway, who is sixtysomething, and her husband Earl, seventysomething, travel more than 800 miles from their home north of Eureka, California, to Los Algodones, Mexico. They go not because they are particularly fond of the tiny border town (pop. 5,000), but because Rose suffers from asthma and is dependent on inhalers that cost $83.70 each at her local pharmacy. In Los Algodones she can pick them up for $15.60.

The Muchways are far from alone. In the past few years, pharmaceutical bargain hunters have flooded across the U.S.-Mexico border. On a typical mild winter day last month, more than 7,000 Americans lined up at pharmacy counters in Los Algodones–up from 3,000 a day just two years ago. The number of drugstores, meanwhile, has tripled over the past five years, from 10 to 30. Lately, Mexican dentists and optometrists have added their own discount services as well. “It’s busier than ever,” says Maria Dolores, head of a local tourist agency. “People find out that the dentists are good and the drugs are the same ones as in the U.S., so they tell their friends.”

There has always been a trickle of Americans who have exploited such price differentials. In the past, however, the crowds were smaller and younger. Now the crush consists largely of seniors who have the time to travel and the incentive to save. There are 36 million elderly Americans, and many are being squeezed between rising drug costs (which have jumped as much as 50% for the most popular prescriptions in the past five years) and the limits of Medicare (which does not reimburse for medication). After making a few calculations to factor in the cost of lodging and gasoline, they’re on the road to the border.

It’s easy to see why. Storefront signs in Los Algodones advertise 28 tablets of Prozac for $31.60, vs. $69.95 in the U.S. The estrogen supplement Premarin costs $6.50 for 42 tablets, compared with $30. A bottle of 90 10-mg tablets of Valium retails for $8.75, instead of $138.

How can the drugs cost so little in Mexico? A better question is why they cost so much in the U.S. Pharmaceutical makers price their products lower south of the border because in a country where wages average about $2.60 an hour, that’s all the market will bear. Even Europeans pay less for drugs than Americans do, because their governments control the price. In the largely unregulated U.S. market, drug companies have successfully defended high prices by arguing that they need to recoup tens of millions of dollars in research costs.

That may change, now that 55% of the American public has access to discounted medications under managed-care programs. Practically the only people still paying the full retail price of prescription drugs are the uninsured and those on Medicare–which is why more of them are heading for Mexico.

–By Christine Gorman. Reported by Elaine Lafferty/Los Algodones